BLBG:Yen Falls Past 85 a Dollar on Japan Stimulus Bets as Oil Climbs
The Japanese yen weakened to the lowest since April 2011 and Asian stocks climbed amid expectations Japan’s new government will push for more cash infusions to bolster the economy. Oil advanced.
The yen retreated 0.8 percent to 85.42 per dollar as of 5:19 p.m. in Tokyo. The currency has fallen against all except nine currencies in the world this year. Japanese stocks rose to nine-month highs while bonds declined with the parliamentary approval of Shinzo Abe as the country’s new premier. Crude climbed 0.6 percent to $89.13 a barrel in New York as copper futures added 0.6 percent on the Comex.
Abe, whose Liberal Democratic Party won a landslide victory in the Dec. 16 election, appointed a cabinet today, including Taro Aso as finance chief. BOJ board members said the economy is weakening and one suggested open-ended asset purchases, minutes of a Nov. 19-20 meeting showed. Democrat and Republican lawmakers in the U.S. plan to convene tomorrow for budget talks aimed at avoiding more than $600 billion in tax gains and spending cuts, known as the fiscal cliff, scheduled to take effect Jan. 1.
“Any comments from the Abe administration that imply additional pressure for monetary easing will be a selling catalyst for the yen,” said Junichi Ishikawa, an analyst at IG Markets Securities Ltd. in Tokyo. “With this thin market liquidity, the exchange rates are more likely to move more.”
The yen slid against its 16 major counterparts and dropped 0.9 percent to 112.71 per euro. The currency is poised to complete a third monthly decline versus the dollar, the longest losing streak since August 2008.
Topix Advances
The MSCI Asia Pacific Index increased 0.2 percent, trading about 1 percent from its highest close for the year as almost two stocks rose for each that fell. The benchmark gained 13 percent this year through yesterday
Japan’s Nikkei 225 (NKY) Stock Average jumped 1.5 percent and the Topix Index, a broader gauge of stocks, rose 1.2 percent, both closing at the highest in almost nine months. Markets in Hong Kong, Australia and New Zealand remained closed for holidays, while others resumed trading.
Nissan Motor (7201) Co., a carmaker that derives almost 80 percent of sales overseas, gained 2.1 percent in Tokyo. Hitachi Ltd. (6501) rose 2.1 percent after its president said the company plans to double its operating margin.
Gains in Japanese stocks were initially limited as 127 companies in the 1,678 member Topix went ex-dividend today, meaning investors who buy the shares today won’t qualify for a year-end dividend.
Foreign Buying
“Market expectations are on the rise for the new government as it beefs up efforts to beat deflation and revive the economy,” said Hiroichi Nishi, an equities manager in Tokyo at SMBC Nikko Securities Inc. “I expect overseas investors to buy shares as they return from the Christmas holiday.”
Abe said he will consider revising the law governing the BOJ if the central bank fails to raise its inflation target to 2 percent from 1 percent at its January meeting. He spoke during a Fuji Television program on Dec. 23.
The new premier struck an agreement with his coalition allies in the New Komeito Party on a policy package for “bold monetary easing.” Board members of the central bank pledged to continue with “powerful easing,” according to the minutes released today.
An unnamed member said that open-ended easing until the BOJ achieves its 1 percent inflation goal is an option, the minutes showed. The BOJ’s 76 trillion yen ($891 billion) program that buys securities ranging from government bonds to stock funds will expire at the end of next year.
Japanese Yields
The yield on Japan’s benchmark 10-year note gained 2 basis points to 0.785 percent as of 4:29 p.m. in Tokyo, according to Japan Bond Trading Co., the nation’s largest interdealer debt broker. The rate is the highest since Nov. 1.
Japan’s consumer prices excluding fresh food probably slid 0.1 percent in November from a year earlier, according to the median estimate of economists in a Bloomberg News survey before data due on Dec. 28. The so-called core inflation rate has fallen an average of 0.2 percent every month in the past decade.
South Korea’s won rose 0.1 percent to near a 15-month high against the dollar, even as a report showed consumer confidence failed to improve in the country. The sentiment index was at 99 in December, unchanged from November, indicating pessimists continue to outnumber optimists, the Bank of Korea said today
Won Support
Money managers outside the country bought more shares than they sold every day this month, according to Korea Exchange, bringing the total of net purchases to $3.3 billion in December.
“Overseas investors’ net purchases of Korean stocks and cross trades of selling the yen and buying the won are the biggest issues in the currency market preventing the won from weakening,” said Byeon Ji Young, a Seoul-based currency analyst at Woori Futures Co.
Crude in New York rose before a Dec. 28 government report that’s expected to show U.S. stockpiles declined last week to the lowest level in 10 weeks, according to a Bloomberg survey.
March-delivery copper futures advanced to $3.5685 a pound on the Comex in New York after workers at BHP Billiton Ltd. (BHP)’s Escondida mine in Chile turned down a wage proposal, threatening a stoppage at the world’s largest copper mine.
To contact Bloomberg News staff for this story: Chua Baizhen in Singapore at bchua14@bloomberg.net
To contact the editor responsible for this story: Nick Gentle at ngentle2@bloomberg.net
